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Klobuchar, Stabenow Introduce Homebuyers Tax Credit

Bipartisan Legislation to Help Make Dream of Home Ownership a Reality for Millions

August 3, 2007

WASHINGTON, D.C. — U.S. Senators Amy Klobuchar (D-MN) and Debbie Stabenow (D-MI), today introduced the First Time Home Buyers Tax Credit Act of 2007. Under the terms of the legislation, over the next seven years more than 15 million people, who otherwise might not have a shot at home ownership, could use tax credits to close the deal on their first home.  The bill is cosponsored by Senators Gordon Smith (R-OR) and Joseph Lieberman (I-CT). 
 
“All Americans dream of owning their first home, but in recent years this dream has become virtually unattainable for too many,” said Klobuchar.   “As housing costs have skyrocketed, providing a tax credit for first time buyers is an important first step in making sure that more Americans can achieve the goal of becoming homeowners.”
 
“Every hardworking man and woman in this country deserves an affordable place to call home,” said Stabenow. “This bill turns our families’ dreams into realities by helping millions of Americans purchase their own homes and invest in their family’s future.”

One of the biggest barriers to homeownership for working families is the cost of a down payment and the costs associated with closing a mortgage. Data from the Mortgage Bankers Association has estimated that typical closing costs on an average-sized loan of $200,000 can approach approximately $6,000.
 
The tax credit can either be claimed in the year after the purchase of a first home, or it can be transferred directly to a lender at closing. This is cash on the table at the time of purchase.
 
To be eligible for the $3,000 individual credit or the $6,000 credit for a married couple, taxpayers must be first-time homebuyers who are within the 25 percent tax bracket or lower in the year before they purchase their home. This translates to an eligibility income cap of $71,950 for single filers, $102,800 for heads of household, and $119,950 for joint returns, with a dollar-for-dollar phase-out of the tax credit beyond the cap.
 
When this bill was first introduced in 2003, it garnered the support of the American Bankers Association, America’s Community Bankers, The Housing Partnership Network, The  National Housing Conference, The National Congress for Community Economic Development, The National Council of La Raza, The National Association of Affordable Housing Lenders, The Manufactured Housing Institute, Fannie Mae, Freddie Mac, National Community Reinvestment Coalition, Standard Federal Bank, Habitat for Humanity, and, the National American Indian Housing Council.

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